Sometimes the cure is worse than the ill: an occasional look into the life of LSE DESTIN 2010

The Shrinking North and The Elusive Quest for Labor Force

There is a fundamental fact which is often absent in the public discussion in developed countries: the population of the so called North is shrinking and at the same time is ageing very quickly. The first fact is the result of fertility rates (i.e. the number of children per woman) falling below replacement level; the second fact is the consequence of the increase in life expectancy, whereby the European median age – i.e. the age which divides the population into two groups of equal size – will be 46 in 2033. What does this imply for developed countries? What does it mean for developing countries?

With the regards to the North, this underlying demographic trends will soon bear a consequence which most of the political class is unwilling and/or unable to deal with: a shortage of labor force. Such shortage would require to open up their borders to immigrants in order to fill the gap. The numbers give an idea of the inevitability of such outcome: from now until 2050, the available working force will increase of 729 millions in Asia and of 591 millions in Africa while dropping of 103 millions in Europe (if one looks at the maps one can get an idea of where the youth will be concentrated). Yet, the political class has so far treated immigration as a taboo topic passing laws which often go in the directions of making immigration more difficult and cumbersome. However, as the labor force gap will continue to widen it is unlikely that they will be able to persist on this path.

Dependency Ratio population aged over 65/ population 25/64 (the darker the color, the bigger the ratio)

With regards to developing countries, the demographic trends will swell the population aged under 64 thus creating the so called youth bulge. If governments will struggle to create jobs for these youth they might become less prone to cooperate with countries in the North, as they have done until now, to contain and limit the outflow of migrants.